Financial News hosted a roundtable with a select group of chief executives and thought-leaders to analyse the findings of FN’s annual Asset Management CEO Snapshot Survey, published last week, and to hear their views on the health of the industry.

Gillian Lofts, EY: I am interested in the reaction to the recent UK government announcement with regards to the annuities and removing the compulsion to invest. How will it affect your businesses? We see it as a £12 billion annual savings business, of which, I guess, the asset management gets a quarter. Does it mean there is £3 billion for the industry to share?

Robert Higginbotham, T Rowe Price: I have absolutely no doubt that what we, as an industry, do is fundamentally good for the client. Is there a downside? Of course there is. But I think moving away from fixed-point annuitisation is right. The other point which is just as relevant, is if you were forced to annuitise after 40 years of saving and then die, you have no ability to retain control of your lifetime’s savings and how you or your inheritors use that. I think it is a basic principle of democracy and is a really important outcome.

John Ions, Liontrust: I agree, but I wonder if the political swing is more of a knee-jerk reaction to the problems of a low interest rate environment rather than giving people the right to decide for themselves? It is great news for the industry, which has the building blocks and savings products. There will be all sorts of challenges in reaching those people and with distribution but, fundamentally, this could be excellent for us.

Mike Foster, Financial News: However, when we get to the age of 85 or 90, will we not need some kind of insurance, such as late-life annuities?

Robert Higginbotham, T Rowe Price: The whole principle of insurance is risk sharing. If you are going to retire at 60 and average life expectancy is now 80, for the first 10 years of that there is very little benefit in risk sharing because almost everybody is going to survive. You are far better off funding yourself during that period and when you get to the point where there is a genuine benefit in risk sharing, then later-life annuities can kick in. Insurance is critical and annuities will be an important part of the toolkit, but to have them as the only option is wrong.

Andrew Formica, Henderson: The government’s new policy on annuities is beneficial to us, but I would not get too carried away – £3 billion of new business is not huge. But it shows that the government is very supportive of the role the industry plays because it is actually supporting and backing the fund management industry to be a greater provider of alternative execution and advice than banks or insurers.

Hendrik du Toit, Investec: The one downside to the UK’s new rules on annuities is where will the infrastructure funding come from now that the savings pool is not serving the community? It is a problem which most countries have not addressed. If we want to be truly sustainable and serve the people who give us the money, we will have to be a little more creative.

Mike Foster, Financial News: A pension fund has confirmed that to me, saying it cannot lend money to infrastructure projects because of uncertainty. Who will fill the gap?

John Ions, Liontrust: Sovereign wealth funds and other developed funds will pick up on infrastructure over the next 20 or 30 years. But the question remains – how to improve the image of the industry? It comes back to the deployment of capital and if we are seen to be doing it in the right way. We were the poor relation to the insurance industry, which lobbied infinitely better than the asset management business, and the banks, which had the reach with the end user. Both of them have screwed it up, so now we have a go.

Robert Higginbotham, T Rowe Price: One force that could help long-term funding of infrastructure is increased consolidation, particularly among plan sponsors, which can already be seen in Australia and Holland.

Mike Foster, Financial News: And local authorities in the UK too?

Robert Higginbotham, T Rowe Price: Yes. If you have professional, long-term investors as intermediaries who understand their fiduciary responsibility, then I think you could create an environment where they could begin to have a longer-term horizon for investing and consider private equity and infrastructure realistic for their portfolio.

Andrew Formica, Henderson: They can only do that through consolidation. Two things should happen. First, pension reform should include compulsory pensions, which is a brave thing for a politician to do it because it is not going to benefit them in their life as a politician. Second, pension funds should be allowed to consolidate, because there is a lot of slippage in the system. It is obvious that the best and the biggest have better governance and responsibility for how they invest, because there is a cost to doing it, which requires professional managers of pension funds.

Robert Higginbotham, T Rowe Price: Where consolidation of local authority pension funds in the UK are concerned, it is not a drive to consolidation because it is primarily in the interests of the long-term pension saver, but because it is a way of getting hold of capital which they can deploy. If we consolidate, we have to consolidate independent from the political process. If we do not, there will be infrastructure spend, but it will not be done in the interest of savers.